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TMI Blog1997 (6) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... being heard to the assessee before charging interest under section 217. The third ground is disposed off accordingly. 3. The facts in relation to the first grievance are as under:-- The assessee maintains personal accounts and a sum of Rs.87,000 was found credited in such account, the explanation of which was that the assessee received gifts from the below given persons:-- 1. Smt. Sumitra Devi Rs. 10,000 2. Sri Kali Pd. Khowalla Rs. 10,000 3. Puranmal Agarwalla Rs. 10,000 4. Smt. Chhoti Devi Rs. 21,000 5. Raj Kumar Agarwalla Rs. 20,000 6. Shri Suresh Kumar Bansal Rs. 11,000 7. Shri Manoj Biani Rs. 15,000 ------------------ Rs. 87000 ------------------ In order to verify the explanation furnished by the assessee, the Assessing Officer examined on oath three persons, viz., Shri Kali Prasad Khowalla, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Appeal No. 2747 (Cal.) of 1990 dated 30-10-1992] 3. Smt. Namita Saraf v. Asstt. CIT [IT Appeal No. 2593 (Cal.) of 1989 dated 17-3-1993] 4. ITO v. Bijoy Kr. Loyalka [IT Appeal No. 936 (Cal.) of 1991 dated 23-12-1992] The assessee counsel has also filed copies of the orders passed by various Benches of this Tribunal in the above mentioned cases to support the case. The Assessing Officer did not believe the factum of gift by various donors in favour of the assessee and came to conclusion that there were no gifts at all and it was the assessee's own income/monies which were brought back in the account books in the guise of gifts and it, therefore, represented concealed income of the assessee. The Assessing Officer, therefore, added the entire sum of Rs.87,000 which is the amount received as gift by the assessee from various donors and credited to his capital accounts in his personal account books. When the matter rested with the first appellate authority viz., A/C he agreed with the reasoning of the Assessing Officer and upheld the entire addition so made. This appeal, therefore, assails such a conclusion of the A/C. 4. Before us, the assessee's counsel submitted that the A/C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fully supported the reasons given by the A/C for confirming the addition. According to him the assessee miserably failed to discharge the onus which lay on it as per section 68 of the Act and, therefore, the Assessing Officer was left with no other option but to add the sum of Rs.87,000 being the amount credited to the assessee's capital account in his personal books and, therefore, no fault can be found with the A/C in confirming the addition so made by the Assessing Officer. 6. We have given our thoughtful consideration to the entire case with reference to the various documents placed in the paper book and our attention to which was drawn. We have also gone through the decisions rendered by different Benches of this Tribunal having more or less similar facts, copies of which have been placed by the assessee forming part of the paper book. In our view there was no case for the Assessing Officer to make addition under section 68 of the Act. The Assessing Officer has merely disbelieved the explanation/statement given by the various donors (except Shri Suresh Kumar Bansal) and has converted good proof into no proof. At this stage we are reminded of the felicitous observations made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the contrary with cogent and strong evidence. We reiterate that the Assessing Officer has not placed or brought on record through his enquiry any cogent or strong evidence to dislodge the factum of gift by various persons in favour of the assessee. The orders passed by other Benches of this Tribunal', copies of which have been placed by the assessee's counsel in the paper book strongly support the case of the assessee that in the absence of cogent, reliable and legal evidence by the Assessing Officer, the addition of Rs.87,000 is wholly unwarranted and cannot be sustained as per law. From the foregoing discussions we are firmly of the opinion that the A/C committed an error in confirming the addition of Rs.87,000 made by the Assessing Officer as per section 68 of the Act. We direct deletion of the same. 7. We have also heard both sides in respect of the sum of Rs.15,000 sustained by the A/C on account of low household withdrawals. In our view the A/C has been quite fair and reasonable in giving relief of Rs.5,800 to the assessee and in sustaining an addition to the extent of Rs.15,000 as against Rs.20,800 made by the Assessing Officer. No other point was urged or argued. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by him is not, in the opinion of the Assessing Officer satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year." 5. My ld. brother has referred to 5 decisions of the Tribunal, relied upon by the ld. counsel for the assessee and, in para 6 of his order, it is stated that the decisions had more or less similar facts, though the contents have not been discussion except briefly in the case of Smt. Bhagwati Devi Goidani (Mohta). Copies of these decisions are available in the paper book and it will be useful to note their contents. 6. In the case of Smt. Bhagwati Devi Goidani (Mohta) there was a controversy whether a sum of Rs. 1. lakh, received by the assessee through banking channels from a resident of Nepal and stated to be a gift, was to be considered as "Income from undisclosed sources". The sum of Rs. 1 lakh was found credited in the assessee's account in the Union Bank of India but was not credited in the books of account maintained by the assessee. The Tribunal held in para 7 of its order that the provisions of section 68 were not attracted. This single factor makes the case distinguishable from the present case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her mother-in-law. Here again, there was no credit of Rs. 4 lakhs in the assessee's books of account and, therefore, section 68 did not come into play at all. The case is, therefore, distinguishable. The Tribunal further went into the facts of the case and found that there was a deed of gift executed by the assessee's mother-in-law where the donor had made the gift and the donee had accepted it. The source of Rs. 4 lakhs was adequately explained as sums paid by M/s. Yak Yeti Hotel Limited, to the father-in-law of the assessee towards dividend and management commission. A finding of fact was given that the claim of gift of Rs. 4 lakhs from the assessee's mother-in-law could not be added. These are findings of fact in the facts and circumstances of the case and cannot be made automatically applicable to the facts of another case. We will see later that the facts of the present case are quite different. Thus the case is also fully distinguishable. 9. The next case is that of Bijoy Kumar Loyalka. In this case, it was found that the assessee had deposited Rs. 21,000 in his bank account on 19-8-1987 and the source was stated to be a gift from one Shri Ramesh Chandak. A declaration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd interest on loan. The Assessing Officer found it strange that a person, having meagre income, residing at Deoghar was assessed to tax at Calcutta and opened a bank account at Dhanbad. There was no transaction in bank account at Dhanbad after 24-7-1987. The Assessing Officer did not accept that his entire earnings would be donated in this manner without keeping anything for his future requirement. 13. It is further recorded that the assessee is sister's son of the wife of Shri Khowala. In other words, the creditor is a close relative. 14. Shri Puran Mal Agarwal is the son of Shri Kali Prasad Khowala and, therefore, also a close relative. In a statement on oath, he stated that he made a gift of Rs.10,000 to the assessee by cheque on 12-5-1987. His bank account at Dhanbad showed that Rs.20,000 was deposited in cash on 11-5-1987 and two cheques were issued of Rs.10,000 each on the next date i.e., 12-5-1987 in the names of the assessee and Shri Atul Kumar Loyalka, his brother, respectively. Regarding the source of deposit of Rs.20,000, he stated that he was doing business of Dalali and got commission on sales to others. However, no evidence was produced of earning such income. Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arty and to satisfy the Income-tax Officer that the entry is real and not fictitious. Once the identity of the third party is established before the Income-tax Officer and other such evidence are prima facie placed before him pointing to the fact that the entry is not fictitious, the initial burden lying on the assessee can be said to have been duly discharged by him. It will not, therefore, be for the assessee to explain further as to how or in what circumstances the third party obtained the money or how or why he came to make an advance of the money as a loan to the assessee. Once such identity is established and the creditors, as in the present case, have pledged their oath that they have advanced the amounts in question to the assessee, the burden immediately shifts on to the department to show as to why the assessee's case could not be accepted and as to why it must be held that the entry, though purporting to be in the name of a third party, still represented the income of the assessee from a suppressed source. And in order to arrive at such a conclusion, even the department has to be in possession of sufficient and adequate materials." 17. In the above three cases the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on why a person earning Rs.18,062 would make a gift of Rs.10,000. 20. In this case, there is nothing to show that the lady was a close relative and, therefore, the burden of proof on the assessee was that which would be necessary for a third party. The lady confirmed the gift and gave particulars of her assessment and also sent a declaration of gift, the initial burden of the assessee, therefore, stood discharged. The Assessing Officer did not pursue the matter further and, therefore, the burden did not again shift to the assessee. I, therefore, hold that the addition of Rs.10,000 on account of cash credit, in the name of Smt. Sumitra Devi, is not justified and is, therefore, deleted. 21. Summons were issued to Shri Suresh Kr. Bansal under section 131 but that was received back unserved with a postal remark "Not Found". it was claimed by the assessee that a gift of Rs.11,000 was received from him. Since the whereabouts were not ascertainable, the Assessing Officer rejected the contention and made an addition of Rs.11,000. 22. Here also, there is nothing to show that Shri Suresh Kr. Bansal was a close relative and, therefore, the extent of burden of proof would be only that re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y again reverted back to the assessee and the explanation was rightly rejected by the Assessing Officer who also noticed that the income in the assessment records shows income from petty gift received on birth-days, Raksha Bandhan and Bhai Duj, amounting to Rs.16,180 and income of Rs.2,521 from interest. This certainly requires verification and the assessee's unwillingness to produce her justifies rejection of the explanation. I, therefore, confirm the addition of cash credit of Rs.21,000 in her name. 26. To sum tip, the additions confirmed and deleted are listed below: ------------------------------------------------------------------------------------- (i) Smt. Sumitra Devi Rs. 10,000 deleted; (ii) Shri Kali Pd. Khowala Rs. 10,000 confirmed; (iii) Shri Puran Mal Agarwal Rs. 10,000 confirmed; (iv) Smt. Chhoti Devi Rs. 21,000 confirmed; (v) Shri Raj Kr. Agarwal Rs. 10,000 confirmed; (vi) Shri Suresh Kr. Bansal Rs. 11,000 set aside; (vii) Shri Manoj Biyani Rs. 15,000 deleted. ----------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order: "1. Whether in the facts and circumstances of the case, the following additions to the assessee's income, as unexplained cash credits under section 68 of the Act, should be confirmed as held by the Accountant Member or deleted as held by the Judicial Member-- ------------------------------------------------------------------------------------- (i) Shri Kali Prasad Khowala Rs. 10,000 (ii) Shri Puran Mal Agarwal Rs. 10,000 (iii) Smt. Chhoti Devi Rs. 21,000 (iv) Shri Raj Kumar Agarwal Rs. 10,000 ------------------------------------------------------------------------------------- 2. Whether in the facts and circumstances of the case, the following addition to the assessee's income as unexplained credit under section 68 of the Act, should be deleted as held by the Judicial Member or set aside for further enquiries as held by the Accountant Member: (i) Shri Suresh Kumar Bansal Rs. 11,000" As the President, I have appointed myself as the Third Member and I have heard the case on 24-12-1996. Before actually deciding the differences between th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows: "2. The first dispute in this appeal relates to an addition of Rs.87,000 to the income of the appellant. This amount was shown to have been received by the appellant as gift from various relatives and friends. The Assessing Officer has not accepted the entire gift as genuine. In his order, he has discussed in detail the facts of each and every donor. I have carefully examined the observations of the Assessing Officer and I find that conclusions arrived at by him are quite reasonable and fair. Therefore, the addition of Rs.87,000 is confirmed and the grounds taken in this regard are dismissed." 4. Against the order of the CIT(Appeals), the assessee came up in second appeal before the Tribunal in which differences arose between the ld. Members who decided the second appeal and, therefore, they requested for appointment of a Third Member. Under the circumstances, the matter is now dealt with by me. 5. The assessee filed a paper book containing 43 pages before the Tribunal. I shall be discussing with the documents contained in the paper book in the course of my order. 6. Now, first, let me take up the gift of Shri Kali Prasad Khowala. He was examined by the ITO on 14-3-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement of Shri Khowala is provided. It reveals that he is a resident of Deoghar. His age was 75 years. He had gifted Rs.10,000 the assessee through cheque and his cheque was duly recorded in his Bank A/c No. 41/7094 of Bank of Baroda, Dhanbad, wherein the gift amount was duly accounted for. There was no occasion for the gift. However, he had given the gift on his own wish. Explaining the reason why he maintained a Bank A/c at Dhanbad, he said that his son-in-law Shri Giridhari Lal Agarwalla stays at Dhanbad and in connection with the work he comes to Dhanbad very frequently and therefore, he kept the Bank A/c for his convenience. When asked about the sources of deposit, he stated that he did brokerage business in sale of trucks and cars and he earned the income. He was previously assessed at Calcutta. He used to previously stay at Calcutta at 26, Burtolla Street, Calcutta-7. His statement was riddled with unnaturalities and it does not inspire confidence. On the one hand, he says that he was maintaining a Bank A/c in Dhanbad and on the other he says that upto 24-4-1987, i.e., till the amount was deposited in his Bank A/c, it was kept at his house. It is unnatural for a pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al income for assessment year 1988-89 into consideration, it would amount to superficial approach to the problem which is depreciated by the judgment of the Supreme Court in Sumati Dayal v. CIT [1995] 214 ITR 801/80 Taxman 89. At page 808 of the report, Their Lordships clearly stated that what is the real test to be taken into consideration before believing a particular version as follows: "The matter has to be considered in the light of human probabilities." Therefore, in my opinion, the evidence on record should not merely be weighed but should be evaluated. it is the nature of the evidence which should be taken into consideration rather than the mere volume of it. In the gift declaration provided at page-3 of the paper compilation, the following is what is stated: "That the above amount has been gifted by me from my own self acquired asset and neither my son/sons and/or anybody claiming under me shall have any right, title and/or interest in the same." From the above, it will be clear that Shri Khowala might be having sons and daughters and he claims that Rs.20,000 which was deposited in Bank on 2-4-1987 represents his self-acquired property in which neither his sons nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other are his elder brothers being sons of his Mausa. He was not able to point out any occasion for making the gift. When asked about the sources, he stated that it represented his income earned in the past. It is claimed that he does business in dalali and gets commission. His statement of income from assessment years 1987-88 and 1988-89 were on record and they show that he had earned income from salary and interest on loan in both the years. Therefore, the ITO deduced that the statement of this witness that he earned income from commission is totally a false statement. Further, after examining his bank account, he found out that the account was opened on 24-7-1986 but there was no deposit in the account earlier to 11-5-1987. His family consists of himself, his wife and he is residing in a house paying rent of Rs.150 p.m. He also pays insurance premium of Rs.63.10 quarterly. His gross income for assessment years 1987-88 and 1988-89 was Rs.21,551 and Rs.23,502 respectively. In his case, the ITO held that there is no reason why a man of Deoghar, will open his bank account at Dhanbad. There is also no reason for making the gift of Rs.10,000 to the assessee and another Rs.10,000 to hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 988-89 at page 12 shows that he obtained a net profit of Rs.23,502.50, out of which he paid salary and bonus of Rs.18,000. However, Shri Puranmal Agarwalla did not claim to have done any business in the accounting year in question. He stated that he was only a broker in sale of scooters and he only gets commission; but his profit loss account shows net profit as if it was received from business. Further, his balance-sheet showed a brought forward balance in capital account of Rs.89,858.80. Unless the balance-sheets of earlier years were filed, one cannot know how far this brought forward balance in capital account is correct. When he is a resident of Deoghar, there is no reason why he was assessed at Calcutta simply because his elder brother as well as his uncle were residing there. Hence statement is full of unnaturalities and against human probabilities. When he is a man of 24 years having his own wife, where is the necessity for him to gift Rs.10,000 to the assessee and another Rs.10,000 to his brother. What is the occasion? No satisfactory. answers were obtained to the above questions. Further, his bank account is also maintained in the same fashion in which the bank account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of Rs.16,180 was stated to have been received from petty gifts received on various occasions like Birthday, Rakhi, Bhayaduj, etc. The gift made to the assessee was found mentioned in the balancesheet. Her cheque book in Central Bank of India was not filed to verify the withdrawal on 17-7-1987 and further to verify whether the cheque amount was duly entered therein or not. In the case of Smt. Cbhoti Devi, the gift-tax assessment order for assessment year 1988-89 was filed which discloses a taxable gift of only Rs.1,000 as per return filed. In order to know whether the return filed was for Rs.1,000 or Rs.21,000, the gift-tax return itself was not filed. The assessment order passed against her under section 143(1) for assessment year 1988-89 was also filed. It shows that she had returned an income of Rs.18,000 as per the return filed. It is significant that copy of income statement of Smt. Chhoti Devi was not provided in the paper book. Therefore, from pages 14 to 18 in the paper book filed on behalf of the assessee, it is not proved that Smt. Chhoti Devi had gifted a sum of Rs.21,000 to the assessee. If really she had gifted the amount, she would have tiled a gift-tax return. U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar Loyalka (his brother). Thus, the whole amount of Rs.20,000 deposited was withdrawn either on the same day of deposit (16-3-1988) or on the next day (17-3-1988) either by the assessee or his brother Atul Kumar Loyalka. Now, as regards the source of income, Shri Raj Kumar Agarwala states that he was working as an Accountant with M/s. Raghunath Prasad Agarwala, Sonapatty Jharia, who were dealers in foodgrains. He received a monthly salary of Rs.1,250. He claims that Rs.20,000 was all along with him in cash which was ultimately deposited on 16-3-1988 in the Bank. As far as the size of his family is concerned, he and his wife have got three daughters aged 10 years, 8 years and 4 years respectively by the date of deposition and all of them are depending upon him. He resides in a rented house belonging to a Trust. Apart from his salary income, he received interest income on loan given by him to various persons. He has no money lending licence. The assessee as well as Shri Atul Kumar Loyalka are the sons of his maternal uncle, Shri Gajanand Loyalka and inter se they are brothers. There was no particular occasion on which he made the gift. It is not true to state that the donors indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Now, let me take up the case of Shri Suresh Kumar Bansal. Summons were issued under section 131 to Shri Bansal at 20, Maharshi Devendra Road, Calcutta, but those summons were returned unserved with the postal remark "not found". The summons were issued to the address furnished by the assessee. It is the claim of the assessee that he received a sum of Rs.11,000 as a gift from this person. The ITO held that since the whereabouts of the donor of the amount of Rs.11,000 were not ascertainable, he held that the gift was not genuine and the amount of Rs.11,000 was added to the income of the assessee as income from undisclosed sources. This was confirmed by the CIT(Appeals), Jamshedpur by his impugned order which is found to be without any discussion. The only document filed relating to Shri Suresh Kumar Bansal was a purported gift declaration said to have been made. A copy of the gift declaration was filed at page-22 of the paper compilation. The gift declaration was made on 6-5-1988 before a Notary Public, Calcutta, and in his affidavit denoting the gift declaration, it is stated that the deponent Shri Suresh Kumar Bansal made a gift of Rs.11,000 on 21-3-1988 to the assessee by dem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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